By Bernard Hickey

The surge in our currency this week to a fresh five month high against the US dollar and a record high against the Euro highlights how we are losing in a race to the bottom.

Britain, Europe and the United States all this week signaled they are determined to print more money to devalue their currencies in order to protect their own economies.

US Federal Reserve Chairman Ben Bernanke committed to keeping US interest rates at zero percent until the end of 2014, a full year longer than previously indicated. There is even now talk emerging from within his own monetary policy making committee of the need for a third round of money printing later this year.

The European Central Bank is now widely expected to lend another 1 trillion euros to its banks on February 29 to calm down financial markets and bolster Europe's battered banking system. Much of that money is being recycled into European government bonds and is even being squirted out the sides into currencies like ours, in the form of buying covered bonds being issued by our banks. This is a massive injection of cash printed out of the ether and pumped into the European economy.

The Bank of England also signaled this week it will probably have to fire up its printing presses again to offset the effects of a tough austerity programme by the British government.

This northern hemisphere strategy of print and hope is fine and understandable for them. Their export sectors become more competitive and they can preserve or create jobs in exporting and in import substitution. Employment in Germany's export sector is doing remarkably well.

But it is effectively a beggar-thy-neighbour strategy.

It means that investors can borrow at near zero percent interest rates and then buy assets in higher interest rate currencies to make an easy profit.  It is fueling a surge in cash around the globe on a hunt for hard assets, such as farmland, mines and oil fields.

It creates an enormous game of musical chairs in the currency markets. It means that the last one to print and devalue is the loser.

New Zealand, along with Australia and some other commodity-driven nations such as Brazil and South Africa, should now be increasingly nervous about being the last one left standing.

Yet our Prime Minister John Key and Finance Minister Bill English seem remarkably relaxed about being the last ones standing.

Both Key and English said this week there was little they could do about what they see as an inevitable surge higher in the currency. Key even said exporters should get used to a currency over 80 USc and pointed out a high currency was great news for consumers. Again, consumers and voters are being prioritised above manufacturing exporters and their workers.

He even said one of the reasons for the rise was that investors in China and elsewhere were attracted to the higher interest rates on the assets in our currency. He could easily have been talking about the sale of New Zealand land to those able to borrow money in Europe, China and America at near zero interest rates.

New Zealand's manufacturing exporters, particularly those exporting to the US-dollar dominated Asian markets and Europe, should now be very nervous. The print and hope strategies look set to leave anyone who doesn't print and hope sprawling in the dust.

We saw the inevitable results of that with yet another collapse of a manufacturing exporter this week. Auckland's Criterion Furniture called in the receivers after a signficant decline in exports into these markets.  There are now 180 workers wondering if they will keep their jobs.

They are the ones left standing.

How long before New Zealand has to join the game? And can we afford to stand by and just let it happen to us?

Our government seems comfortable as a spectator. At some point it may have to become a player.

New Zealands economy and agricultural sector lives and dies on its biosecurity protocols.

The worry is that in an endeavour to save money from Government departments our border security could be at risk and the overall costs if there is an outbreak will be far greater than that saved.

The PSA outbreak is a graphic illustration of what a disease outbreak can do to an industry and millions of dollars are being lost to the economy and those in that industry.

Do you have confidence in our countries biosecurity and do we have our priorities right on where public spending should be cut?

The European Union's food safety watchdog has been asked to assess the health risks posed by a new virus that has infected animals in Britain, France, Germany, the Netherlands and Belgium.

The Schmallenberg virus, named after the German town where it was first discovered in November, has infected cattle, sheep, and goats, causing birth defects in offspring including deformation of the head, neck and limbs.

"The European Commission has requested urgent scientific and technical assistance for possible risks resulting from the Schmallenberg virus," the European Food Safety Authority (EFSA) said in a statement reported in Stuff.

EFSA will provide the Commission and EU governments with likely scenarios on how the insect-borne virus could affect livestock in the coming months, and will also assess possible risks to human health, the statement said.

Treasury recommendations to weaken biosecurity protection for short-term growth will undermine the long-term strength of our export economy, the Green Party said today.

Treasury made the recommendation in their Briefing to the Incoming Minister today.

Their recommendations are to reduce “at the border” barriers and to change new organisms regulations – weakening the laws around the introduction of new organisms like genetically modified organisms.

“Treasury’s advice is incredibly short-sighted and risks the long-term viability of our agriculturally-based export economy,” said Biosecurity spokesperson Steffan Browning.

By Pattrick Smellie

Chinese investment in New Zealand is tiny compared to Australia and needs to grow “to levels that reflect the growing commercial relationship with China,” the government says in its NZ Inc strategy for engagement with the world’s fastest-growing superpower.

Investment into China by New Zealand firms is also minuscule, at $541 million, compared with $36 billion of Australian investments in China, partly because of New Zealand’s wider track record of exporting commodities for others to process rather than investing in its own high-value production.

Part of the problem, the strategy says, is that “Chinese investors are unaware of New Zealand opportunities”, with resources to improve two-way understanding of commercial opportunities to be beefed up by, among other moves, establishment of a high-level New Zealand China Council.

The relatively small size of investment opportunities in New Zealand was also a factor in limited Chinese inward investment, as well as the strict controls that apply to Chinese companies seeking to invest outside the Chinese mainland.

New Zealand firms’ inexperience of Chinese markets was a major reason there was not more investment flowing from this country into China.

While China invested approximately US$60 billion globally in 2010/11, Chinese-owned assets in New Zealand amount to only NZ$1.87 billion in total, compared with $100 billion invested by China in Australia.

The strategy says “New Zealand would benefit from increased foreign direct investment from China and outward direct investment into China”, but avoids overt comment on farmland sales or other politically contentious issues that are understood to have delayed the strategy’s release by anything up to a year.

On the trade front, the strategy seeks to build on the 152 percent growth in New Zealand exports to China since the free trade agreement negotiated in 2008 kicked in.

The strategy sets a new three year goal of doubling two-way trade in goods with China from $12.7 billion at present to more than $20 billion by 2015, with government targeting of 50 fast-growing, profitable New Zealand companies in China, priority for sectors with high growth potential, and by growing the base of “China-ready exporters.”

While the strategy promotes more New Zealanders learning the Chinese language, Prime Minister John Key indicated after the launch that this was not so far a priority of government education policy.

Also targeted is 20 percent growth in the booming market for Chinese students to study in New Zealand, and a 60 percent increase in tourism by 2015. Other service industries with potential were identified as architecture, consulting, IT, environment, and food safety services.

The education target will be assisted by investigating mutual recognition of professional qualifications and extending the number of New Zealand private training enterprises listed by the Chinese Ministry of Educations “Study Abroad” website.

A further leg of the strategy targets greater collaboration in scientific research and development.

One of the strategy’s main recommendations is that New Zealand needs unified branding in China, where belief in the country’s safety, beauty, and purity was widespread, but individual firms were unknown.

“What we can and should do is market NZ Inc as an umbrella brand…for all New Zealand products and services in the first instance and then individual brands to be covered by this big umbrella,” Michael Gan, chairman of Sino-Kiwi firm Richina told some 200 invited guests at the strategy launch on Auckland’s waterfront.

A Uniliver board member, Gan said the multi-national company had adopted this single brand approach to good effect in China “because of unique challenges and opportunities China demanded.”

“The results are spectacular. New Zealand should do the same thing.”

The strategy document says work is under way now to create unified NZ Inc branding that preserves value in other existing country and firm-level branding.

The strategy also targets opportunities for Maori business, with a push on to establish a beach-head for such opportunities in the south-western Chinese province of Guizhou.

(BusinessDesk)

Updated with the sub headline corrected from $20 million to $20 billion

A lawyer representing a group of New Zealand farmers wanting to oust a Chinese buyer of the so-called Crafar farms argued the Chinese investor is just “putting money up” and intends to be only a passive investor.

The High Court in Wellington heard on Friday that the sale of 16 farms owned by the Crafar family to Shanghai Pengxin is still conditional on the buyer being satisfied with the terms of the consent. There was one outstanding item. The receiver KordaMentha yesterday extended the time for the deal to go unconditional to Feb. 7.

Two ministers approved the sale after receiving a recommendation from the Overseas Investment Office. The price has not been disclosed but there has been speculation of a $210 million figure.

Alan Galbraith QC, representing New Zealand buyers seeking to overturn the sale, argued the Chinese buyer was a passive investor in an industry in which he had no experience.

Shanghai Pengxin is ultimately controlled by Chinese businessman Jiang Zhaobai.

The involvement of state-owned farm manager Landcorp as a manager of the farms was fundamental to the recommendation of approval of the application.

Galbraith said the test in the law covering overseas investment requiring buyers to have experience and acumen was personal to the individual buyer otherwise “it is no test at all”.

Anyone with lots of money could buy farms in New Zealand and get a manager in. “It could be Microsoft,” he said.

“All the applicant ... is bringing to the application is money and the contract with Landcorp,” he said.

“The inquiry is about the personal expertise of individuals in control not whoever they may hire,” he said.

Galbraith said that the sale of farm land in New Zealand had always been sensitive. It was a privilege for overseas persons to own sensitive New Zealand assets.

Farms in New Zealand mostly sold to the farmer next door but this farm sale had been marketed as a bulk lot.

Justice Forrest Miller said the defence will argue the plaintiffs do not have standing and should not be in court.

He said the plaintiff, in exploring the idea of relevant experience, seemed to imply that those buying dairy farms needed to know one end of a cow from another.

Galbraith argued that businesses like Fletcher Challenge and New Zealand Farming Systems Uruguay had had terrible experiences operating in other countries even in areas of the same generic experience of their existing business.

The court heard that the Chinese buyer was essentially a property developer.

The buyer has outlined plans to invest in the farms and argues it can help develop China as a market for dairying.

(BusinessDesk)

By Amanda Morrall (email)

1) Carpe Diem

The following is one of my favourite quotes from the Dalai Lama on the subject of our perverse relationship with money. Asked what surprised him most about humanity, he replied "man.''

Why?

"Because he sacrifices his health in order to make money. Then he sacrifices money to recuperate his health. And then he is so anxious about the future that he does not enjoy the present; the result being that he does not live in the present or the future; he lives as if he is never going to die, and then dies having never really lived.”

I was reminded of that sad but true quote when I read another depressing item about the top five regrets of the dying. These regrets were recorded by an Australian palliative care nurse who shared with the dying their final 12 weeks of life. The most common regret was this: "I wish I hadn't worked so hard.'' 

Don't forget to build work/life balance into your long-term financial plan.

2) Cheap trips

I have come to like the Auckland rain (mainly because it's warm) but can't help feeling a bit cheated on summer time. Sunny days have been few and far between in the big smoke not unlike other places around the country. Many Kiwis have begun planning their winter escape to make up for it.

We have the benefit of working beside a tourism outfit so I inquired within to find out where the best deals are right now on the high Kiwi dollar. Despite the Kiwi's impressive gain on the Euro recently, Asia looks most attractive taking into account food, accommodation and shopping sprees.

Vietnam, Cambodia, India, Thailand and Japan were among the leaders. The United States also offers good value for money because of the all the discounting that's going on there.

BNZ and Expedia put out a top 10 travel destination list calculated on the basis of 12 month currency gains for the Kiwi back in November.  Their top five were as follows: Turkey, South Africa, Hungary, Poland and India.

3) Travel currency calculator

Before you go, you might want to find out where you'll get the best exchange rate if you're taking local currency. Be sure to check out our travel currency calculator here to get the most competitive rate from the Kiwi banks selling.

4) Currency charts

According to Finance Minister Bill English, our high Kiwi dollar is here to stay. Whether you believe Bill's crystal ball or not, best to keep an eye on currency fluctuations if you are headed off soon. Our charts in the currency section will give you a good indication of where they've been over the past few months and years. While you're there, you might want to take in some of the news and analysis. Not as dry as you might expect.

5) Credit card conversion fees

Another consideration to bear in mind, particularly if you're a credit card traveller, are conversion fees. Yes, they do vary from card to card and apply every time you make a transaction. Here's a sample of the rates charged by some of the major players put together by our interest rate analyst here. If your credit card isn't on this list, phone and ask or crack out the magnifying glass and read the fine print on your disclosure documents or statement.

To read other Take Fives by Amanda Morrall click here. You can also follow Amanda on Twitter @amandamorrall